November Crude Oil grinded higher on Wednesday, September 21, 2016, as the EIA report created some brief volatility and then it ranged until the Fed interest rate decision was announced. The EIA report showed Crude Oil inventories declining a whopping 6.2 million barrels, traders were looking for a large 3.25 million build. The expected build was tempered by Tuesday’s API report’s huge 7.497 million barrel decline. The EIA’s confirmation of the drawdown in crude oil inventories is bullish in my opinion. Gasoline inventories declined by 3.2 million barrels, a bigger decline than the 1.4 million barrel decline expected. The EIA decline was larger than the 2.5 million barrel decline reported in the API report.
These declines overshadowed the increase in inventories in Cushing, Oklahoma. The EIA report had inventories increasing by 536,000 barrels and Tuesday’s API report had it increasing by 407,000 barrels. Distillates showed a 2.2 million barrel build in the EIA report and a 1.4 million barrel build in the API report. US production increased by 19,000 bpd to 8.512 million bpd.
The report sent price up to 45.49 then down to 44.74 as traders reacted to the report. Crude then ranged (44.91 to 45.34) as traders waited for the Fed announcement on interest rates.
The Fed left interest rates unchanged, looking for more evidence of progress before they raise rates. The announcement lifted Crude Oil prices and it rallied for the remainder of the day, trading to 45.65 and ending the day at 45.62. Crude Oil ended the day above the 21 DMA (45.47) and we may see Crude Oil prices continue higher to test the 100 DMA (46.19).
If Crude can overtake the 100 DMA a test of trendline resistance is possible up at 46.67. Resistance then comes in at 47.33, the August 22 low and then trendline resistance at 48.29. A failure from the 21 DMA could lead to a test of the 13 DMA (45.05), the 50 DMA is at 44.65 and then 43.93 is trendline support.
- High 45.65
- Low 44.50
- Last 45.62
Daily Pivot Points for 9/22/16
- R2 46.41
- R1 46.01
- PIVOT 45.26
- S1 44.86
- S2 44.11